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Gold dips despite firming German business confidence data

CommoditiesJan 25, 2013 02:00PM ET
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This article has already been saved in your Saved Items - Gold prices fell on Friday in a second day of profit-taking despite firming German business confidence data, which sent investors opting for the euro and equities over gold in a risk-on trading session.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery were down 0.72% at USD1,657.85 a troy ounce in U.S. trading on Thursday, up from a session low of USD1,655.15 and down from a high of USD1,671.55 a troy ounce.

Gold futures were likely to test support USD1,653.55 a troy ounce, the low from Jan. 11, and resistance at USD1,695.85, Tuesday's high.

Earlier Friday, the Ifo Institute for Economic Research said that its index of German business confidence improved to 104.2 in January from 102.4 in November, beating market calls for a rise to 103.0, which sent the dollar falling against the euro, normally a recipe for rising gold prices.

Elsewhere, the European Central Bank said that banks will repay EUR137.159 billion in three-year loans next week, opting to hand back the money early, a sign the European financial sector may be returning to health.

The European Central Bank made the three-year loans available to banks last year to increase liquidity levels to combat the debt crisis.

The dollar, meanwhile, saw downward pressure after the U.S. Census Bureau reported that new home sales rose less than anticipated in December, gaining by 369,000 units after an increase of 398,000 in the previous month.

Analysts had expected new home sales to rise by 385,000 units last month.

The news sparked demand for higher-yielding asset classes though investors avoided gold and opted instead to go long on equities, viewed by many as nicely valued.

Meanwhile on the Comex, silver for March delivery was down 1.70% and trading at USD31.182 a troy ounce, while copper for March delivery was down 0.56% and trading at USD3.656 a pound.

Gold dips despite firming German business confidence data

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